Business Law Prof Blog

Davidoff on "how globalization increasingly allows companies to avoid United States taxes and regulation."

Over at DealBook, Steven Davidoff has posted "The Benefits of Incorporating Abroad in an Age of Globalization."  Davidoff uses Michael Kors Holdings as a case study demonstrating how companies are incentized to incorporate abroad in order to take advantage of tax savings, decreased regulatory burdens, and a decreased threat of shareholder litigation.  He notes further that this is not an isolated case, as "[p]rivate equity firms have been buying American companies with significant foreign operations and reorganizing them as foreign corporations."  To the extent that this creates problems for the U.S., he suggests that "[p]erhaps it is time for the United States to adopt a tax system more in line with the rest of the world."  What I found more interesting, however, was his suggestion that "American investors may be investing in Kors and other companies incorporated outside the United States without appreciating that they are not subject to the same United States laws that other publicly traded companies are."  This seems to me to be the crux of the debate about whether corporate regulation generally follows a race to the bottom or the top.  The greater the likelihood that signifcant portions of the investing community do not properly value the jurisdiction of incorporation, the greater the likelihood that the race is to the bottom rather than the top.

SJP

"Europe: How bad will it get?"

Today I attended a terrific event hosted by the Rock Center for Corporate Governance at Stanford on whether the Eurozone will survive in the present form. It seems the answer to this post's titular question is that it's going to get real bad. 

Robert Madsen from the Center of International Studies at MIT shed light on this quite dark subject. Madsen cut through all of the jargons and acronyms you might hear in discussions of sovereign solvency and the Eurozone crisis. He highlighted the following key issues:

• The structural flaws in the way the Eurozone was designed (the lack of a common business cycle, cultural barriers and other obstacles to labor mobility, the lack of a fiscal transfer mechanism, and issues with developing a shared political commitment)

• The massive increase in debt, public and private, in some European countries

• The cost of fixing the problem (in short: trillions, perhaps in the double digits)

As Madsen described the possible ways of moving forward, a palpable gloom hung over the room. A major financial restructuring seems unlikely. The present strategy of fiscal austerity and ad hoc measures is not promising. The other possibilities include preemptive changes to the Eurozone and some kind of delayed collapse. The takeaway: fasten your seatbelts.

The Rock Center website may have a video of the event soon.

--Elizabeth Pollman

Live Blogging From the Central States Law Schools Association Annual Meeting

I'm blogging live from the Central States Law Schools Association Annual Meeting being held at the University of Toledo School of Law (we're currently on break for lunch).  You can find the schedule of panelists here.  So far I've attended the "Economics, Markets, & Wealth" panel, and the "Tax Law" panel.  Of the papers presented as part of the EMW panel, I was able to find Dustin Buehler's "Economic Evolution, Jurisdictional Revolution" on SSRN.  Here's the abstract:

In June 2011, the Supreme Court issued its first personal jurisdiction decision in two decades. In J. McIntyre Machinery, Ltd. v. Nicastro, the Court considered whether the placement of a product in the "stream of commerce" subjects a nonresident manufacturer to personal jurisdiction in states where the product is distributed. The Court issued a fractured opinion with no majority rule, with some justices expressing reluctance to "refashion basic jurisdictional rules" without additional information on "modern-day consequences." This Article explores the consequences of these rules by providing the first law-and-economics analysis of personal jurisdiction. A descriptive analysis initially demonstrates that jurisdictional rules significantly misalign litigation incentives. Unclear and restrictive personal jurisdiction rules increase the likelihood of procedural disputes, inflate litigation costs, and decrease the expected benefit of suit, making it less likely that plaintiffs will file lawsuits. This in turn skewers substantive law incentives - because jurisdictional rules make litigation less likely, many injurers escape liability and are inadequately deterred from engaging in wrongful conduct. Drawing on this descriptive analysis, the Article proceeds to a normative analysis of the stream of commerce theory. It argues that a broad version of the stream of commerce doctrine best aligns procedural and substantive law incentives, while protecting fundamental due process rights. Ultimately, this Article concludes that it is time for a procedural revolution: the Supreme Court should allow expansive personal jurisdiction over nonresident manufacturers in products liability cases.

SJP

 

Reporting Back From the Ohio Securities Conference

Yesterday, I had the privilege of participating in a panel discussion at the 2011 Ohio Securities Conference entitled, "Dodd-Frank: One Year Later."  A complete list of the panelists, along with a link to related material follows:

Barbara Black: How to Improve Retail Investor Protection After the Dodd-Frank Wall Street Reform and Consumer Protection Act

Eric Chaffee: The Dodd-Frank Wall Street Reform and Consumer Protection Act: A Failed Vision for Increasing Consumer Protection and Heightening Corporate Responsibility in International Financial Transactions

Stefan Padfield: The Dodd-Frank Corporation: More than a Nexus of Contracts

Geoffrey Rapp (moderator): Legislative Proposals to Address the Negative Consequences of the Dodd-Frank Whistleblower Provisions: Written Testimony Submitted to the U.S. House Committee on Financial Services

SJP

Defining the Rights and Responsibilities of Corporations

The Supreme Court has agreed to hear the appeal of KIOBEL V. ROYAL DUTCH PETROLEUM, 621 F.3d 111 (2d Cir. 2010).  One of the questions presented is as follows:

Whether corporations are immune from tort liability for violations of the law of nations such as torture, extrajudicial executions or genocide, as the court of appeals decisions provides, or if corporations may be sued in the same manner as any other private party defendant under the ATS for such egregious violations, as the Eleventh Circuit has explicitly held.

Over at the Huffington Post, Mike Saks opines:

[I]t would ... be quite odd for the Court, which found in Citizens United that the Framers intended the First Amendment to apply to corporate persons, to reject the concept when it comes to corporate liability for crimes against humanity under a Founding-era statute.

SJP

Davidoff on Britain’s new takeover rules

Over at DealBook, Steven Davidoff provides some excellent analysis of Britain’s new takeover rules, which went into effect this past Monday.  The title of his post sums up his predictions:  “British Takeover Rules May Mean Quicker Pace but Fewer Bids.”

If this sort of thing interests you, you’ll definitely want to read the entire post—but I’ll note some of the highlights here.  First, Davidoff reports that a wide array of rules were originally considered by the Takeover Panel of Britain, but the most controversial of these (requiring a two-thirds vote, requiring disclosure upon acquisition of 0.5 percent, and disenfranchising shareholders who acquired shares after the offer was announced) were rejected.  Second, the rules that were adopted, “set up a nice dichotomy with the American takeover scheme”:

In the United States, targets can agree to large termination fees and provide extensive deal protections to an initial bid. Targets can also adopt a shareholder rights plan, or poison pill, which can prevent a company from acquiring the target. But in Britain none of these devices are allowed.

As mentioned above, Davidoff sees the net result of these new rules being less initial bids (because bidders will be entering the fray subject to more risks), but more competition for targets once bids are launched.

SJP

Joe Yockey on Solicitation, Extortion, and the FCPA

I just finished reading Joe Yockey's paper on Solicitation, Extortion, and the FCPA. Joe points out the problems and uncertainties companies face under the Foreign Corrupt Practices Act, and suggests ways to correct some of the problems with the Act. But the paper's main point is that regulators should shift more of their focus to the demand side of bribery--the officials who seek bribes.

The article is very well written and Joe's argument is interesting and worth reading. I'm not sure his proposed solution will work. One of the reasons the FCPA focuses on the supply side in the first place is the difficulty pursuing foreign officials who demand bribes. As Joe points out, many of the countries where bribery and corruption are prevalent do little to prosecute those accepting bribes. And the U.S. and other jurisdictions that do care face jurisdictional, not to mention political, issues when they try to pursue corrupt foreign officials. Imagine what would happen if U.S. prosecutors tried to pursue a corrupt Chinese official for demanding a bribe from a U.S. company.

That's a very quick response to a very detailed, sophisticated argument. I strongly suggest you check out the article if you have an interest in the FCPA.

-Steve Bradford

Gooses, Ganders, and the Many Facets of Monetary Policy

Bloomberg reports that the Fed gave $1.2 trillion in "secret loans" to the largest banks in the United States and around the world.  Bloomberg provides a cool liquidity chart here, that allows comparisons of the borrowers and their peak amounts borrowed.

I share frustration that, during the crisis, massive loans were available to the largest borrowers, while small businesses and individuals who posed reasonable credit risks were shut out of the loan market. And just because the Fed's massive loan program appears to have served its purpose without any significant harm to taxpayers, it doesn't mean that it was a risk-free endeavor.  Still, I'm of a mixed mind as to whether its a good idea to ensure the Fed can't make such loans.

Note the following, from an Allan Sloan article I posted earlier:

Adding to the current sense of foreboding, at least for me, is the fact that the Federal Reserve, which rode to the rescue last time, is legally constrained by provisions of Dodd-Frank legislation little recognized outside the world of regulators and financial techies. Back in 2007, the Fed could invent programs to bail out solvent but illiquid institutions. It could also turn investment banks like Goldman Sachs and Morgan Stanley (MS) into bank holding companies with access to unlimited Fed funding -- and even infuse cash into nonbank basket case AIG (AIG) directly and indirectly to forestall an uncontrolled collapse, which could have made the Lehman Brothers disaster look like a mere rounding error.

Sometimes, banks, businesses, and individuals are solvent, but not liquid, and access to credit is the only thing that can keep the banks, businesses, or individuals from going under.  We see this at the largest banks, as the Fed program seems to demonstrate, and we see it at the individual consumer level, where there is some indication that restricted access to expensive payday lending can have a negative impact on consumers. (Zinman, 2008) 

At a minimum, this is another instance where it is not clear to me whether the large government bailout (or bailout-like) program is the problem, though I remain skeptical of the bailout programs.  What is clear to me is that the implementation of the program for only the largest and most powerful among us again creates an inequity that warrants questioning.  As the Bloomberg report explains: "$1.2 trillion of public money [is] about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages."  

There is clearly some interest in shutting down the Fed's (and government's) ability to make large loans and expenditures.  Maybe that's right, but I happen to like the idea that the government can choose to help in the face of disasters, whether they are financial or natural disasters. (Note that I maintain my view that government does a terrible job of planning for and mitgating such diasasters, but that's a different matter.)  I just want government to make good choices and to recognize that's what's good for the very wealthy goose, may also be good for the very modest gander.

--JPF

Poker and the Debt Crisis

Poker News reports:

Senate Majority Leader Harry Reid reportedly told the Las Vegas Review-Journal that Internet poker legislation "will get done." … The joint select committee on deficit reduction has been tasked with finding at least $1.5 trillion in debt savings over the next 10 years. Licensing and regulating Internet poker is a way the committee could identify billions of dollars with little effort.

Perhaps that will stop the exodus of poker pros.

SJP

A Market Cure for Too-Big-to-Fail?

Over at DealBook, Jesse Eisinger writes:

One of the most remarkable aspects of the debate about overhauling the financial system after the great crisis was the absence of serious contemplation of breaking up the largest banks…. Lawmakers and regulators have failed to remake our system with smaller, safer institutions. What about investors? Big bank stocks have been persistently weak, making breakups that seemed politically impossible no longer unthinkable…. [However, e]ven in the face of investor pressure, there are forces that would hold bank breakups back. Mainly pay. “The biggest motivation for not breaking up is that top managers would earn less,” Mr. [Mike Mayo, an analyst with CLSA] said. “That is part of the breakdown in the owner/manager relationship. That’s a breakdown in capitalism.” Institutional investors — the major owners of the banks — are passive and conflicted. They don’t like to go public with complaints. They have extensive business ties with the banks. The few hedge fund activist investors who aren’t cowed would most likely balk at taking on such an enormous target.

You can read the full post here.

SJP

Pasquale on the Perils of Debt Brinksmanship

Over at Concurring Opinions, Frank Pasquale has put up an interesting post on Public Finance and National Security.  Here's some of what caught my eye:

When the US went to war in Afghanistan and Iraq, it did not raise taxes to cover the enormous expenses involved (including spending on military services and hardware). Rather, it borrowed hundreds of billions of dollars, much of it from abroad. The borrowing has increased as conflict drags on, and as financial crises devastated tax receipts…. The financial crisis of 2008 marked a sudden lack of faith in the creditworthiness of many Western banks, including leading US-based ones. In order to maintain global confidence in the increasingly fragile and interconnected financial institutions that enable US borrowing, the US government has repeatedly “backstopped” private entities (or stepped in to alter markets) when their potential failure threatened to undermine investor confidence…. [However, as] long as the US appears capable of making political decisions to cut spending and raise taxes adequately to cover its debts, it does not appear to be in anyone’s national interest to spark a disorderly sell-off of Treasuries…. [But the] U.S. has recently proven itself incapable of achieving normal OECD-level taxation of its wealthy, in either good times or bad. A culture of tax-avoidance among America’s wealthy is approaching Greek levels…. As creditor nations watch the spectacle of a Republican party elected on deficit-cutting rhetoric immediately turn to budget-busting tax cuts, they are doubting the political seriousness of the US about repaying its debts.

SJP

 

Douglas Irwin's Peddling Protectionism

This is going to mark me as a real finance geek, but I just finished reading Peddling Protectionism: Smoot-Hawley and the Great Depression, by Douglas A. Irwin. Irwin is an economics professor at Dartmouth who has authored a number of books and articles on trade, tariffs, and the Great Depression.

Peddling Protectionism is both a history of the Smoot-Hawley Tariff Act and an examination of its consequences. The best part of the book, in my opinion, is the political history in the first chapter. Irwin really brings the debate to life, providing a close look at the involvement of Congressman Hawley, Senator Smoot, President Hoover, and the many other players in the political process. It's amazing how close the tariff bill came to failure; I wonder how U.S. economic history would have changed if we had no Smoot-Hawley

Irwin’s analysis of the economic consequences of the bill is also interesting, and convincing. Some of it might be a little difficult for readers without at least some background in macroeconomics, but most of the discussion is accessible to general readers. Marshaling a variety of statistics, Irwin concludes that Smoot-Hawley was not responsible for the Depression, but certainly exacerbated it. He also finds that, “although . . . [Smoot-Hawley] . . . was not the principal reason for the general outbreak of protectionism that so damaged world trade in the early 1930s, it was a contributing factor.” And it most certainly was a major factor in diverting international trade away from the United States.

It’s almost impossible to have a debate about international trade without Smoot-Harley coming up; it is the bête noire of free trade advocates. (Irwin begins the book with Al Gore's invocation of Smoot-Hawley in his 1993 debate with Ross Perot on Larry King Live.) That makes this book required reading for anyone interested in international trade.

-Steve Bradford

Article: Understanding Exclusion of the CISG

If you are interested in international business involving sales of goods, my friend and colleague Bill Johnson's article, Understanding Exclusion of the CISG: A New Paradigm of Determining Party Intent, 59 Buff. L. Rev. 213 (2011), is worth a look.  Here's an excerpt:

One increasingly important body of law that governs certain international sale of goods transactions is the United Nations Convention on Contracts for the International Sale of Goods (“CISG”). The CISG is an international treaty that has been ratified by the United States and is part of U.S. law. It automatically applies to certain sale of goods transactions. But when it applies or more specifically how it can be excluded has befuddled U.S. courts for the CISG’s entire history.

. . . .

This Article seeks to bring understanding where there is misunderstanding regarding effective exclusion of the CISG, including with respect to (i) the role that a choice­of­law clause ought to play in the analsyis and (ii) the obligation under the CISG to consider extrinsic evidence to determine the parties’ actual intent. To achieve that goal, this Article primarily analyzes four related but distinct items: (1) the text of the CISG itself, (2) the  travaux préparatoires, or drafting history, of the CISG, (3) the American Biophysics decision and the five cases cited as authority by the  American Biophysics court to support its incorrect conclusion, and (4) illustrative reasoning of U.S. courts that have engaged in analysis, some sound and some faulty, of a variety of other issues under the CISG.

--JPF

Jay Brown on "The Consequences of the NYSE-Deutsche Combination on Listing Standards"

Over at The Race to the Bottom, Jay Brown has an interesting 8-part (to this point) series on the impact of the NYSE-Deutsche combination on listing standards.  Here are the topics:

• Introduction / Overview
  

• Ensuring Regulatory Independence

• Part 3 [Conflicts of Interest]
  

• The Issue of Funding

• Changes to the Definition of Director Independence

• Limits of Regulatory Independence

• SEC Review and German Ownership

• Regulatory Alternatives

SJP

Are "New" Techniques in Combating FCPA Violations Worth It?

Law.com reports that a new federal bribery case in the D.C. District Court is underway.  The defendants, who were executives for arms and military equipment suppliers, "were indicted last year in an aggressive prosecution that marked the first large-scale use of undercover techniques in a Foreign Corrupt Practices Act [(FCPA)] case."

I have to say that I am a little surprised that this is the first "large-scale use of undercover techniques" in an FCPA bribery case.  I admit, I have little to no idea what goes into an FCPA investigation, but I find it hard to imagine trying to combat bribery cases without undercover work.  I suppose it could happen, but I would think undercover work would be reasonably effective in this arena.

That said, I can't help but wonder if this is the best use of resources.  The FCPA investigations are apparently becoming quite elaborate, and I am pretty sure there are more pressing matters that should be dealt with first.  I remain anti-bribery and believe people should be accountable for knowingly breaking the law even if the law might be dumb. But it appears that the DOJ, SEC, and other investigators are focusing on high-profile cases they think they can close, rather than pursuing the worst offenders. I'd add these types of FCPA cases to the recent criticisms of insider trading enforcement from Stephen Bainbridge and Steve Bradford.

Maybe just raising the specter of any investigation and conviction will cause other would be criminals, terrorists, and other evil doers to think twice. But I rather doubt it. 

[UPDATE: Mike Koehler, the FCPA Professor, informs me that my suspicions that undercover work has been used in previous FCPA cases is correct. See here for more information.]

--JPF

DRAFT: Poker, Securities, Etc.

DISCLAIMER:  The following is a draft of a post I've wanted to put up for the last few days but wherein I have been unable to find the time to nail down some of the relevant law.  Therefore, you should read the following as a "Is this correct?" post.

Steve's earlier post on crowdfunding reminded me of a post I wrote a while back on the securities implications of "ChipMeUp," a website that allows people to stake poker players in particular tournaments.  You can read the post here.  Here's the most relevant part:

What makes staking poker players (which is nothing new) a bit more interesting under the Howey test than staking authors or ballplayers is the question of whether you would be relying solely on the efforts of the poker player for your profit.  In other words, we quickly get into the age-old poker debate: Is poker predominantly a game of skill or luck?  Interestingly, two recent state court decisions have come out on the skill side (see here and here).

The recent DOJ indictment of various online poker sites again raises the issue of whether poker is predominantly a game of skill--but not as centrally as one might think.  First, the main thrust of the indictment is the allegation that the sites violated the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).  If the underlying facts hold up, this is not a claim that implicates the question of skill in poker because applicability of the UIGEA apparently boils down to the placing of bets and wagers and defines the same as "the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance."  Well, not even the staunchest advocate of poker being predominantly a game of skill would dispute that it is nonetheless "subject to chance" (insert here latest bad-beat story).  It should be noted here that the UIGEA does not appear to make playing online poker illegal--it merely prohibits financial institutions from transfering funds in connection therewith (and the facilitation thereof via fraud--which is apparently the ultimate relevant charge against the sites).  It is also worth noting that it was deemed necessary to expressly exclude at least some securities transactions from this definition.

However, the indictment does also include allegations of running an illegal gambling business.  I assume that this charge is being brought under the Illegal Gambling Business Act of 1970 (18 U.S.C. § 1955), and here the issue of poker as a game of skill seems to be more centrally implicated.  The act defines illegal gambling as, among other things, "a gambling business which … is a violation of the law of a State or political subdivision in which it is conducted."  It further expressly identifies "pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein" as illegal gambling, though it does not limit illegal gambling to those activities.

Putting aside for the moment the question of where the activity of online poker is being conducted, at least some states do define illegal gambling as including games where chance predominates (thus, the court cases linked to in my excerpt from the ChipMeUp post).  So, perhaps the question of skill in poker is raised under the indictment via this route (though this strikes me as unlikely).  Some states, like Ohio, specifically name poker as a form of gambling--but I think the better view here is that unless they have expressly extended those statutes to cover online poker, the definition should be deemed to cover only home games occurring within the state that are not subject to the statutory exemptions and similar activities.  I believe support for this view can be drawn from the recent events in the state of Washington, where the legislature specifically addressed online poker via statute.  (Cynics will note that this legislation was apparently not intended to battle the evils of gambling, but rather to protect land-based casinos--until recently some of the strongest opponents of regulated online poker.)

To the extent the issue of skill in poker is raised under the indictment, it seems to me one easy way to prove that (IMHO) skill predominates in poker is to get the University of Alberta Computer Poker Research Group to compare the results of a bot that plays completely randomly against the bot that currently employs the most skill in its decision-making.  Given a large enough sample size, one should be able to identify the portion of winnings attributable to skill.  Even given the likelihood that a bot is unlikely to be able to implement all the skills of a live poker player, I'd still bet (say, 50 cents ... one time) that skill predominates.

Finally, if you believe this indictment constitutes some combination of a waste of taxpayer dollars or an offense against freedom, you might want to consider joining the Poker Players Alliance.  (In the interest of full disclosure, I am a chip-carrying member.)  Even if it turns out that the illegal money laundering charges hold up under the current indictment, which would lead me to support prosecution, I still don't believe merely playing poker online should be criminalized.

SJP

Feeling Gassy: High Prices Do Not Equal Fraud

The federal government is putting together a task force to investigate fraud in energy markets.  Attorney General Eric Holder announced the formation of the Oil and Gas Price Fraud Working Group to "monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm."  The announcement continues:

“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” said Attorney General Holder.   “We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity.   If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action.”

Pander, pander.  I'm assuming someone will check into the "pinched pockets" of Verizon customers who no longer get the same deals when renewing their phone contracts as they once did.  And, of course, Apple consumers, must be getting pinched.  With profits up 95% how can the Justice Department ignore the magical, gravity defying Apple?  According to one report,

"The numbers have gotten too big to ignore as Apple defies the law of gravity with 83 percent year-over-year revenue growth," JP Morgan analysts said. "In our view, Apple is the magical growth story in large-cap tech."

Gas prices are high around the world.  In a rare move, on Wednesday, Chinese truckers protested the high fuel costs in Shanghai. Everybody, it seems, is irritated by the costs of fuel.  But that doesn't make it fraud. I'm not saying there isn't fraud in some energy markets, but price fluctations in a relatively open and global market are hardly shocking.  If we want to control prices, then we should have the government buy all the country's fuel to level prices.  Or we could all take measures to hedge and lock in prices. But we don't. Most of us prefer to buy in the spot market. 

On March 2, when the prevailing view seemed to be $4 per gallon gas by the 4th of July, I wrote that I thought gas prices would hit $4 per gallon by Memorial Day.  We're almost there in most of the country, and already there in a few places.  I never said I wanted to be right on that (quite the contrary), but it's what I expected.  I didn't make that prediction based on my anticipation of massive fraud.  It's just my sense of the market. 

I am speaking later today at The Third Annual Biofuels Law and Regulation Conference, “Exploring Cutting Edge Legal Issues at the Nexus of Bioenergy,” at University of Illinois at Urbana-Champaign’s Illini Union about renewable fuels and the psychological hurdles that are impeding our process of fuel switching from oil as our primary transportation fuel.  Without ignoring the enormous technological hurdles we have remaining, it is clear to me we think we can still manage oil -- from exploration to extraction to market -- in a way that is entirely unrealistic, especially as world demand has grown.

Don't get me wrong.  I'm all for ferreting out fraud. I just don't see high prices in a global market as very good indicator that fraud is occurring.  And I think our efforts, on the fraud front and on the energy policy front, would be better focused somewhere else. 

And, for what it's worth, I don't think we'll see $5 per gallon gas this summer (but it might get close).

--JPF

Proxy Fight in Japan

Public corporate governance disputes disputes are uncommon in Japan, and wins by dissident shareholders are even less common in Japan than they are in the United States. But here's one worth watching--a Japanese proxy fight where the dissident may actually win.

The Wall Street Journal reports that Aeon Co., which owns 12.3% of the voting stock of Parco Co., is planning a proxy fight to oust Parco's President and four other board members. Aeon may win the fight. Parco's largest shareholder, Mori Trust Co., which owns 33.2% of Parco, will support Aeon's effort.

-Steve Bradford

First Rwandan IPO: Beer

Not a bad place to start.  The sale of 25% of the brewery Bralirwa marks the first IPO in Rwanda. Bralirwa is 75% owned by Heineken and holds "94% of the Rwanda beer market. It is also a licensed Coca-Cola bottler and has a virtual monopoly of the the local sparkling drinks market. It is also licensed by Diageo to brew Guinness." 

Assuming a good number of people in Rwanda like beer, Coke, and sparkling drinks, this seems like a very wise place to start with IPOs.  With $29.5m raised and an offering that was about three times oversubscribed, I'd say I'm not alone in that opinion.

-JPF

With States Starting to Move All-In on Online Poker, Can the Fed Be Far Behind?

I've blogged previously about the tax revenue states and the federal government are missing out on by rejecting fully legalized and regulated online poker here.  Now, it appears New Jersey and California are taking the lead on capturing some of this missed opportunity.  Meanwhile, the push continues at the federal level as well, with Senator Reid backing legalized web poker.

SJP